Hello,

I am trying to run diagnostics of my model and I would like to clarify the following uncertainty. I have panel data and I am using fixed effects. Initially, I estimated a model without lagged dependent variable as a regressor but due to suspecting autocorrelation, later I have included it. When I am running Ramsey's RESET test should I run it on the initial or second model? Result for the first one tells about omitted variables, however when the lagged variable is included - there are no omitted variables. How can I interpret this?